To pivot or to persevere that is the question

Hey, Lean Startup aficionados!

Today marks Day 4 of our deep dive into Eric Ries' groundbreaking book, "The Lean Startup." So far, we've explored the Build-Measure-Learn Feedback Loop, MVP strategies, and some inspiring case studies. But now it's time to tackle one of the most critical decisions entrepreneurs face: when to persevere and when to pivot. We'll discuss the importance of this decision, share some practical advice, and take a look at the story of Votizen – a startup that discovered the power of the pivot.

Here's what's in store for today's newsletter:

1. Pivot vs. Persevere: Making the Call in the Lean Startup World

2. The Votizen Story: A Tale of Pivoting to Success

3. The Five Types of Pivots: Finding the Right Direction for Your Startup

📚 Estimated Read Time: 5 minutes

On to the pivot😊

Pivot vs. Persevere

The Build-Measure-Learn Loop is all about gathering data and insights to make informed decisions. But what happens when the data shows that your current approach isn't working? That's when entrepreneurs face the tough choice of whether to persevere with their original plan or pivot and try something new.

To pivot means changing your strategy while staying true to your vision. It's about recognizing when your initial assumptions were off the mark and making course corrections to better align with market demands and customer needs. On the other hand, perseverance means staying the course, refining your approach, and working through the challenges in pursuit of your original goal.

The key is to strike the right balance between flexibility and determination. But how do you know when to pivot or persevere? This is where the Lean Startup methodology shines, as it provides the tools and insights to help you make this critical decision.

Votizen

To make this more interesting, let's dive into the story of David Binetti, the CEO of Votizen, and see how he navigated this challenge while trying to boost civic participation in American politics.

So, who's David Binetti? He's a pretty experienced guy who's been involved in bringing the American political process up to date. With Votizen, his plan was to create a social network for verified voters to connect, exchange ideas, and support civic causes together. He built the first version of the product for just $1,200 and launched it in three months. Not bad, right?

David's initial concept involved four big leaps of faith:

1. Customers would be interested enough in the social network to sign up. (Registration)

2. Votizen would be able to verify them as registered voters. (Activation)

3. Customers who were verified voters would engage with the site's activism tools over time. (Retention)

4. Engaged customers would tell their friends about the service and recruit them into civic causes. (Referral)

The thing is, people liked the idea, but Votizen still needed some fine-tuning. David was trying to figure out if people would sign up, whether they could verify voter registration, how customers would engage with the platform, and if they'd refer their friends. After eight months, lots of testing, and $20,000 spent, the results weren't quite what he'd hoped for. That's when David found himself at a crossroads: should he pivot or persevere?

Instead of giving up, David decided to change things up. He listened to what his customers were saying and transformed Votizen into @2gov, a platform that helped people contact their elected representatives through social media. This new platform turned digital messages into physical letters and petitions for politicians. Pretty cool, huh?

Developing this new version took another four months and $30,000, but the results were impressive! David saw significant improvements in registration, activation, retention, and referral rates. However, there was still a problem: very few activists were willing to pay for the service, and the value of each transaction just couldn't support a profitable business.

So, David pivoted again. He shifted Votizen's focus from individual activists to larger organizations and businesses interested in politics. At first, it seemed like a great move, with lots of companies showing interest and signing letters of intent. But, when it came time to close the deals, things didn't work out as planned.

A catalog of pivots

Pivots come in all shapes and sizes, so let's break them down into bite-sized pieces and sprinkle in some humor and additional insights from our original text.

1. Zoom-in Pivot: Ever noticed a single feature in your product that's just chef's kiss? It's like turning a tiny sandwich into an all-you-can-eat buffet. That's what Votizen did when they shifted from a full social network to a simple voter contact product.

2. Zoom-out Pivot: The opposite of the Zoom-in Pivot. You realize your killer app is just a small part of something much bigger, like a pepperoni on a pizza. Time to expand the menu and turn that single feature into an entire product.

3. Customer Segment Pivot: You thought your product was perfect for a certain group, but they're not that into it. But don't worry, there's another group of customers out there who love it. It's like dating - you gotta find the right fit!

4. Customer Need Pivot: You've gotten to know your customers super well, but they're not that interested in the problem you're solving. Time for a makeover! Find a new problem to solve, and you'll be back in their good graces. Like Potbelly Sandwich Shop, which started as an antique store and pivoted to selling sandwiches.

5. Platform Pivot: This one's like changing from being the star of the show to becoming the stage that supports other acts. You switch from being an app to a platform or vice versa, and sometimes companies need to do this pivot more than once.

6. Business Architecture Pivot: Are you a high margin, low volume (complex systems model) type of business or a low margin, high volume (volume operations model) one? It's like deciding whether you want to sell a few gold-plated sandwiches or a ton of regular ones. Companies sometimes switch from one to the other to find their sweet spot.

7. Value Capture Pivot: You know that saying, "There's more than one way to skin a cat"? Well, there's more than one way to make money, too. Changing up how you capture value can have a significant impact on your business, product, and marketing strategies.

8. Engine of Growth Pivot: Switch up your growth strategy to find that sweet, sweet success. There are three primary engines of growth: viral, sticky, and paid. Sometimes this pivot requires a change in how value is captured.

9. Channel Pivot: Sometimes you just need to change the way you're delivering your product. It's like switching from selling lemonade on the street to selling it online. Same lemonade, different channel. This pivot can disrupt traditional sales channels, like how the internet shook up the newspaper and magazine industries.

10. Technology Pivot: You've found a new way to achieve the same result, just with different tech. It's like upgrading from a flip phone to a smartphone - same purpose, but way cooler. This pivot is more common in established businesses and often involves incremental improvements to retain an existing customer base.

Remember, a pivot is just a strategic hypothesis, not a magic wand. Sure, some famous companies pulled off incredible pivots, but don't get too caught up in trying to copy their success. You do you! And hey, pivots are a part of life. Embrace the change, and let's keep dancing our way to startup success!

That's all, folks! We hope you enjoyed this lighthearted look at the wonderful world of pivots. Now, go on and pivot like there's no tomorrow!